Following a recent wave of sell-offs in January, the altcoin market appears to be gearing up for a significant recovery, potentially surpassing Bitcoin [BTC]. The Altcoin Season Index, as reported by the analytics platform Alphractal, has now reached a critical juncture, hinting at a possible revival in the near term.
A recent update from Alphractal stated:
“With Bitcoin climbing from 89k to 97k over the last 24 hours, the Altcoin Season Index suggests that a recovery phase for altcoins could be on the horizon.”
An analysis of the data indicated that historically, the Altcoin Season Index has rebounded each time it reached the lower end of its range. Interestingly, these recoveries have typically trailed Bitcoin’s performance. Therefore, the recent surge from below $90k to $97k could catalyze a resurgence in the altcoin sector.
What Lies Ahead for Altcoins?
However, it should be noted that an alternative altcoin indicator from Blockchain Center currently hovers at a neutral position, indicating a balanced market sentiment where a shift in either direction is possible.
Nonetheless, Bitcoin currently maintains an edge in light of potential pro-crypto developments that may emerge following the upcoming inauguration of Donald Trump on the 20th.
Turning our focus to the broader altcoin sector, a closer examination of BTC and Tether’s USDT dominance could provide additional insights into the market direction.
Both these metrics exhibit an inverse relationship with altcoin momentum. A decline in BTC and USDT dominance commonly signals a flow of capital from BTC to altcoins, thereby exerting upward pressure on altcoin prices.
This phenomenon was evident during the altcoin surge in November, coinciding with a drop in BTC and USDT market dominance.
Currently, BTC.D faces resistance at a trendline, while USDT.D shows indications of a downward retreat. A simultaneous decline in both these indicators in the days ahead could validate Alphractal’s projection of an altcoin recovery.
It is worth noting that certain prominent altcoins such as XRP and Hedera [HBAR] have notably outperformed Bitcoin thus far. Over a 90-day period, XRP and HBAR have recorded gains of 450% and 600%, respectively, whereas BTC saw a modest increase of just 52% during the same period.